HL Deb 01 December 1994 vol 559 cc701-4

3.21 p.m.

Baroness Hollis of Heigham asked Her Majesty's Government:

How much money has been spent on promoting rents-to-mortgages for local authority tenants under the Leasehold Reform, Housing and Urban Development Act 1993, and how many tenants have exercised their right to buy in this way.

The Minister of State, Department of the Environment (Viscount Ullswater)

My Lords, the Government spent £414,000 on a national information campaign to coincide with the launch of the rent to mortgage scheme. So far local authorities report three completed rent to mortgage sales and about 50 applications still being processed.

Baroness Hollis of Heigham

My Lords, if I heard the Minister correctly—there was a little noise in the House—I believe that he referred to three completed sales and 50 applications in process for an expenditure of £414,000. We are grateful to the Minister for his reply, pointing out that the scheme is a costly flop, as we argued that it would be. Given the content of yesterday's DSS Statement which will add to the threat of repossession for those on income support, should we not be promoting a mortgage to rent scheme rather than the folly of a rent to mortgage scheme, so that families at risk of repossession can keep their homes?

Viscount Ullswater

My Lords, the noble Baroness mocks. But what she really mocks is the aspiration of ordinary people to own their own home. The rent to mortgage scheme is a stepping stone to acquiring equity in their homes. Why should council tenants be denied the information of that scheme? We ran an information campaign, not a promotional campaign. It is the Government's duty to tell tenants of any new scheme which could provide them with an opportunity to become home owners.

Lord McIntosh of Haringey

My Lords, in view of that answer, will the Minister invite his noble friend Lord Strathclyde the Chief Whip to apologise to the House for having described it at the time the Bill was put forward as an attractive route to owner occupation when clearly it is not?

Viscount Ullswater

My Lords, I agree with my noble friend that it is an attractive route. The noble Lord mocks too. However, before the introduction of the rent to mortgage scheme, two pilot studies were run, one in Milton Keynes, the other in Basildon. Take-up was encouraging. There were 106 rent to mortgage sales. A number of factors have acted against the operation of the scheme; falling mortgage interest rates—everyone, I believe, will be pleased with that—and stable house prices, which have meant that many potential rent to mortgage applicants can now afford to buy on normal right to buy terms.

Lord Dean of Beswick

My Lords, in answer to my colleague on the Front Bench, the Minister widened the subject a little to the sale of other council houses and said what a welcome scheme that was. It was a welcome scheme at the commencement. However, is he not now aware that tens of thousands of people are trapped in former council housing which no one wishes to buy. They are now loaded with an unrealisable asset and wish local authorities to be forced to buy them back. Is that a success of which the Minister is proud?

Viscount Ullswater

My Lords, when I go about the countryside—I was in Birmingham yesterday—I notice that when people have bought their houses they decorate them and make them most attractive. That factor very often distinguishes the homes from some other council estates with tenants.

Lord Stallard

My Lords, when I go about the country, and about London, I speak to many thousands of people, including council house tenants, who never wished to contemplate the scheme. It was a magnificent flop. The Minister referred to an expenditure of £414,000 for three tenants to participate in the scheme. The Government sought to introduce the scheme at a time when the housing market was depressed. No one wanted to buy and no one could sell. I believe that there should be an investigation into the expenditure on the publications. The Minister referred to pilot schemes at Basildon and elsewhere. It is quite obvious that those schemes were a flop too. We knew that they would be a flop; we said that the schemes would be a flop. Why do the Government not confess that we were right and that what was a flop will continue to be a flop?

Viscount Ullswater

My Lords, I do not agree with anything the noble Lord says. Any scheme which allows people to buy their own homes is worth promoting, or at least giving information about. Although the department estimated that 1.4 million tenants were eligible for the rent to mortgage scheme, individual tenants could not be identified because of the confidentiality of information about housing benefit. But if all council tenants had been sent details of the scheme, the estimated costs would have been about £1.4 million. Therefore the campaign is a very cheap way of informing council tenants.

Lord Barnett

My Lords, while seeking not to mock the Minister, will he tell us whether potential buyers were informed that their mortgage payments could well rise because of a reduction in mortgage tax relief?

Viscount Ullswater

My Lords, I have no problem with people mocking me. It is mocking those who aspire to become home owners to which I object.

The noble Lord is right. Anyone taking on a mortgage should understand carefully that rates can go up and down, just as rents very often go up. The noble Lord will understand that many people are contemplating the scheme. They need to go into it carefully and to seek advice. That is why some 50 applications are still being processed.

Lord Howell

My Lords, perhaps I may congratulate the Minister on visiting Birmingham. We do not always have that pleasure with regard to Ministers in this Government although a noble Baroness recently visited my football team, Aston Villa. We have done badly ever since.

Had the Minister had more time on his visit to Birmingham, he would have discovered what most of us know—that a large number of people took out mortgages that they cannot now properly finance. The result is a great disparity in the amount of money different owner occupiers can spend on the maintenance of their houses. It is a problem the Government should address.

Viscount Ullswater

My Lords, over 1.5 million tenants in Great Britain have bought their homes since the inception of the scheme in 1980. I am still convinced from the research we have done on the right to buy that home ownership is the tenure which most people prefer. Of council house tenants who bought under the right to buy, 96 per cent. were found to be pleased that they had bought. I believe that those are genuine aspirations and that they should be supported.